SME Bank seeks extra Bt2 bn to meet CAR standard

Early last month the ministry injected Bt555 million into the bank, which raised its CAR to 5.1 per cent from 3.28 at the end of last year, as part of the bank’s rehabilitation plan submitted to the ministry recently.

Pichai Chunhavajira, chairman of SME Bank, said yesterday that the bank’s performance met the targets in the rehab plan for last quarter and is expected to continue meeting the remaining targets for this year. The crux of the plan is cutting bad loans and extending new loans.

The bank had cleared Bt2.48 billion of bad loans in the first quarter out of the total of Bt31.3 billion as of the end of last year. However, some performing loans turned into non-performing loans of Bt2.3 billion, resulting in a net improvement of Bt100 million in the quarter. 

This year the bank expects to clean up over Bt10 billion in distressed assets, so NPLs will decline to Bt28 billion or 28 per cent of total outstanding loans by year-end.

Most of the restructured bad loans belonged to major customers, so the focus will switch to small clients. The bank will ask them to restructure their debts or it will take legal action against them. Most of them have already agreed to enter negotiations with the bank. SME Bank recorded Bt6.8 billion in new loans, mostly for productivity improvement and mostly limited to Bt5 million per customer. Last quarter, its outstanding loans reached Bt96 billion. Lending will target service and trading businesses.

The bank saw a gross profit of Bt1.7 billion in the first quarter, driven by higher interest income and lower cost of funds, but it booked a net operating profit of only Bt350 million because it set aside high provisions for doubtful debt, Pichai said.